J.H. Rayner (Mincing Lane) Ltd v Department of Trade and Industry and Related Appeals
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE KERR,LORD JUSTICE NOURSE'S,LORD JUSTICE NOURSE,LORD JUSTICE RALPH GIBSON |
| Judgment Date | 27 April 1988 |
| Neutral Citation | [1988] EWCA Civ J0427-8 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | 88/0438 |
| Date | 27 April 1988 |
[1988] EWCA Civ J0427-8
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
Royal Courts of Justice,
Lord Justice Kerr
Lord Justice Nourse
and
Lord Justice Ralph Gibson
88/0438
In the Matter of the International Tin Council
MR. MARK LITTMAN Q.C., MR. RICHARD AIKENS Q.C., MR. RICHARD McCOMBE and MR. ADRIAN HUGHES (instructed by Messrs Elborne Mitchell) appeared on behalf of Maclaine Watson.
MR. SYDNEY KENTRIDGE Q.C., and MR. JONATHAN HIRST (instructed by Messrs Clyde & Co.) appeared on behalf of J.H. Rayner.
MR. STANLEY BURNTON Q.C., MR. MAURICE MENDELSON and MR. MARK BARNES (instructed by Messrs Slaughter & May) appeared on behalf of the Six Banks.
MR. JONATHAN SUMPTION Q.C., and MR. RICHARD FIELD Q.C., (instructed by Messrs Allen & Overy) appeared on behalf of the Multi-Brokers.
MR. ANTHONY GRABINER Q.C., MR. NICOLAS BRATZA and MR. DAVID RICHARDS (instructed by the Treasury Solicitor) appeared on behalf of the Department of Trade and Industry.
MR. GORDON POLLOCK Q.C., MR. ALAN BOYLE and MR. RICHARD SIBERRY (instructed by Messrs Clifford Chance) appeared on behalf of Australia, Japan, Malaysia, Nigeria, and Thailand.
MR. PETER LEAVER Q.C. (instructed by Messrs Travers Smith Braithwaite) appeared on behalf of Belgium, Denmark, Greece, Ireland, Italy, Luxembourg, and Zaire; and with MR. STUART ISSACS (instructed by Messrs Herbert Oppenheimer Nathan & Vandyk) appeared on behalf of Finalnd, Norway, Sweden, and Switzerland.
MR. PATRICK TALBOT (instructed by Messrs Boodle Hatfield) appeared on behalf of Canada.
MR. BERNARD EDER (instructed by Messrs Clifford Chance) appeared on behalf of the European Economic Community.
MR. RICHARD JACOBS (instructed by Messrs Lovell White & King) appeared on behalf of France, Germany, and the Netherlands.
MR. E. HUW DAVIES (instructed by Messrs Stocken & Lambert) appeared on behalf of India.
MR. HOWARD PAGE Q.C. (instructed by Messrs Macfarlanes) appeared on behalf of Indonesia.
MR. PETER IRVIN (instructed by Messrs Cameron Markby) appeared on behalf of the International Tin Council.
(" ")
Page
| Introduction | 1 |
| The main issues | 4 |
| History of international organisations | 6 |
| History of the ITC | 11 |
| The Sixth International Tin Agreement (ITA6) | 19 |
| The Headquarters Agreement | 32 |
| The 1972 Order in Council | 34 |
| Justiciability | 36 |
| Submission A | 42 |
| Submission B | 51 |
| Secondary liability in English law | 55 |
| Secondary liability via the route of international law | 58 |
| Submission C | 70 |
| State Immunity | 80 |
| EEC claim to sovereign immunity | 88 |
| Conclusion | 97 |
Introduction
These appeals are in the four "direct actions" brought by eleven brokers and six banks against the twenty-four members of the ITC. The appeals arise from two judgments. On 24 June 1987 Staughton J struck out the first three actions in a judgment delivered in the Commercial Court reported in [1987] BCLC 667. Then, on 29 July 1987, Millett J struck out the fourth action in a judgment in the Chancery Division reported in [1987] BCLC 707. The present judgment deals with the plaintiffs' appeals against both judgments. The background to this and the other appeals in this series has been set out in the Introduction by the court.
The main action before Staughton J was the Rayner action which also covers the greatest part of the issues common to all four appeals. The Amalgamated Metal action was known as the "Multi-Broker" action since the plaintiffs are nine brokers who had entered into tin contracts with the ITC in the same London Metal Exchange (LME) form as Rayner. The Arbuthnot Latham action was one of the "Six Banks" actions involving claims on banking loans made to the ITC. As regards Maclaine Watson, they are equally brokers suing on LME tin contracts, but they issued their writ in the Chancery Division and sued the DTI alone.
The primary issue in all the direct actions is whether the members of the ITC can in some way be held liable for the debts of the ITC in respect of contracts made by the plaintiffs with the ITC on which the ITC defaulted. This issue involves a number of alternative allegations of liability advanced by the plaintiffs and applications to strike out the actions on various grounds by all the defendants. Before turning to the issues it is necessary to refer briefly to a number of differing aspects of these various proceedings.
First, as mentioned above, the Multi-Broker and Six Banks' actions were joined to the Rayner action, and the relevant issues in all of them were dealt with together. But Staughton J permitted the joinder of the two later actions only on the basis that no issues were to be raised additional to those raised in the Rayner action. There was some argument about the scope and effect of this order. The question arose because Mr. Sumption QC for the plaintiffs in the Multi-Broker action sought to rely on an affidavit sworn in that action on behalf of the DTI, which he claimed contained an admission that the ITC was acting throughout as the agent of its members. On behalf of the member States Mr. Pollock QC objected to this allegation because it did not arise in the Rayner action and was accordingly inadmissible, at any rate at this stage. Since in my view nothing in the nature of an admission was made in any event, I put this issue on one side.
Secondly, there are certain aspects of the direct actions which are not before us on these appeals and not at present the subject of the members' striking out applications. These fall into two classes. First, the plaintiffs in the "Multi-Broker" and "Six Banks'" actions are also suing the member states in tort, and Maclaine Watson is also suing the EEC in tort in the European Court pursuant to Articles 178 and 215 of the Treaty of Rome. Secondly, an allegation that the ITC concluded the relevant contracts as agent on behalf of its members as undisclosed principals is presented in two different ways in the "Multi-Broker" and the "Six Banks'" actions, but only in the first of these ways in the Rayner action. These were referred to respectively as "constitutional" agency and "factual" agency. The former is based solely on the constitution of the TTC as evidenced by the Sixth International Tin Agreement (ITA6). The latter alleges that some or all of the broker contracts were made with the express authority of some or all of the members. It was decided by Staughton J and affirmed in this court that the allegations laid in tort and the factual allegations of agency should not form part of these hearings, since they formed no part of the Rayner action. We understand that further applications by the member states to strike out the remaining allegations in the direct actions which are not presently before us are due to be heard in due course. It follows that all references to the plaintiffs' claims are to their claims in contract, and all allegations of agency are based upon ITA6 exclusively.
Finally, there is an important difference between the claims of all the brokers on the one hand and of the banks on the other. As explained hereafter, the ITC enjoys immunity from "suit and legal process", but not in respect of the enforcement of arbitration awards. The brokers' contracts all contained arbitration clauses, and all the brokers obtained awards against the ITC which they are now seeking to enforce. Maclaine Watson also obtained leave to enter judgment in terms of the award under section 26 of the Arbitration Act 1950, but nothing turns on this. However, the plaintiff banks, with the exception of one of them—Kleinwort Benson—had no arbitration clauses in the loan contracts on which they are suing. They are accordingly in no position to overcome the ITC's immunity by obtaining arbitration awards. As against this, the LME contracts contain provisions which are alleged by the member states to exclude any possibility of their being sued as undisclosed principals, whereas there is no similar provisions in the bank loans. These factors led to certain differences in the approach adopted by the brokers and the banks. The counsel whom we heard for the brokers were Mr. Kentridge QC for Rayner, Mr. Sumption QC for the Multi-Brokers, Mr. Littman QC and Mr. Aikens QC for Maclaine Watson; and Mr. Burnton QC for the banks.
On the side of the defendants we mainly heard Mr. Pollock QC on behalf of the member States and Mr. Grabiner QC on behalf of the DTI. They were allies throughout, but Mr. Grabiner was not concerned with the defence of sovereign immunity. This defence is of course not open to the DTI. It follows that the DTI's claims to strike out the actions were based solely on the RSC Order 18 Rule 19 as disclosing no reasonable cause of action whereas the parallel contention of the member States is formally based on sovereign immunity, but in effect equally upon the absence of any reasonable cause of action. The same position applies effectively to the EEC. They advanced a somewhat surprising claim for sovereign immunity at common law, and we heard Mr. Eder on this on a separate occasion.
The main issues.
The plaintiffs advanced three alternative submissions which were called A, B and C. They can be summarised as follows:
A. (Direct liability). The ITC has no legal personality distinct from its members. The members are an unincorporated association who agreed to trade, and traded, in the name of the ITC. The plaintiffs' contracts, although made nominally with the ITC, were accordingly made directly with the members, and the members are...
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